Disney’s Fiscal Full Year and Q4 2019 Earnings Webcast

[tirian]

Good point. Shutdowns for refurbs aren’t reported as “empty” they are ignored as “temporarily not existing”

Nevertheless, attendance at WDW has definitely gone up over the years, as guests have simply cut back on merch spending to make up the ticket difference.

It’s easier to see the impact in California because the resort depends on a network of local hotels, all of whom reported low occupancy over the summer.

 

[tirian]

That is devastating for HKDL currently and moving forward. Not only with potential layoffs at the resort but may be a ripple effect in layoffs in other parts of the company to make up for the losses at HKDL.

—A sad fact, since it’s a nice little resort.

 

[seascape]

I can't believe the doom and gloom here. Yes, China had problems and hurt income but lets be real, Parks, Resorts and Consumer Products profits were up 17%. If China is going to be a problem for Disney. Universal will have the same problem, especially when even with great results at Universal Japan. they only had a 0.9% increase in profits.

Now getting to streaming. Hulu is the hidden gem. The bundle is going to be massive. Plus, in early 2020 the plans for Hulu's international expansion will be announced. Think of how many subscribers Disney Plus, Hulu, ESPN Plus and Hotstar will have. A bundle if the 4 in India will blow everyone else out of the water in a country with just about the same population as China. They will also beat Netflix in China. However. Peacock will do very well in China too because I expect it will include their Chineese partners. In Europe, a combination including over the top streaming local TV like Star does will allow Disney to grow and compete. They may stay smaller that Star but their profits will be large. In Central and South America. the Fox assests will allow Disney to reach the top spot. That only leaves Africa for the fight to see who is numbet 1 but if you carefully look at the full streaming market it is hard to make an argument that Disney will not be the number 1 provider

 

[Lilofan]

In the past, they’ve closed blocks of rooms for “refurbishment” to improve the occupancy percentages. I’m not talking about the real refurbs at Pop, Yacht and Beach, etc. I’m talking about closed rooms.

I’m not suggesting this is happening now—it’s probably not—but I do raise an eyebrow when any company reports percentages rather than solid numbers.

Percentages are actually easier to understand and used for comparisons. Solid #s are too complex for the simple minds and whatever it takes to please Wall Street so analysts can recommend a BUY in the company stock and the media networks to talk up Disney. Numbers can be fudged but that would be not good if Disney played that game.

 

[VaderTron]

I’m not going...so that is “my part”

But I would like that not to be permanent. But I can’t support the pricing structure and egregious abuse by the supplier.

“Fun” should be fun...not suck eggs mentally

I must have misunderstood a post of yours on another thread. I thought you were just there riding the Skyliner. My mistake.

 

[Mickeyboof]

In the past, they’ve closed blocks of rooms for “refurbishment” to improve the occupancy percentages. I’m not talking about the real refurbs at Pop, Yacht and Beach, etc. I’m talking about closed rooms.

I’m not suggesting this is happening now—it’s probably not—but I do raise an eyebrow when any company reports percentages rather than solid numbers.

Struggling Broadway shows will often close a balcony to do the same illusion on paper- go from 40% capacity to 80%. Looks great to investors who don't have actual data.

Its curious what the solid numbers would be.

I recall on my last trip while taking the ferry very late from Magic Kingdom, it was hard not to notice an almost solid wall of lagoon-side hotel rooms with the resort tv glowing blue uniformly at the Grand Floridian. Empty rooms. Absolutely empty.

It was eerie. It was also the night before Galaxy's Edge opening.

 

[bartholomr4]

Still no 10Q release yet (Sec.gov).... This report is year end and will provide a lot more detail on individual parks, studio's, investments, etc.

 

[Mickeyboof]

Still no 10Q release yet (Sec.gov).... This report is year end and will provide a lot more detail on individual parks, studio's, investments, etc.

Can you link us when they do post? Thanks!

 

[seascape]

In the past, they’ve closed blocks of rooms for “refurbishment” to improve the occupancy percentages. I’m not talking about the real refurbs at Pop, Yacht and Beach, etc. I’m talking about closed rooms.

I’m not suggesting this is happening now—it’s probably not—but I do raise an eyebrow when any company reports percentages rather than solid numbers.

Almost every hotel company would die for 80% occupancy. Now remember, in the first quarter includes the Coronado tower that is new and the Riviera. All those new rooms and still 90% occupancy expected. It should be around another 845 rooms, which even with an average of 2 people per room should add 1,521 people a day or 555,165 a year to attendance. I know that is only slighyly above a 1% increase in their attendance but it is a very conservative number. Then consider the new rooms at Bonnett Creek and Flamingo Crossing and all the new hotel rooms else in the themepark area.

 

[tirian]

I can't believe the doom and gloom here. Yes, China had problems and hurt income but lets be real, Parks, Resorts and Consumer Products profits were up 17%. If China is going to be a problem for Disney. Universal will have the same problem, especially when even with great results at Universal Japan. they only had a 0.9% increase in profits.

Now getting to streaming. Hulu is the hidden gem. The bundle is going to be massive. Plus, in early 2020 the plans for Hulu's international expansion will be announced. Think of how many subscribers Disney Plus, Hulu, ESPN Plus and Hotstar will have. A bundle if the 4 in India will blow everyone else out of the water in a country with just about the same population as China. They will also beat Netflix in China. However. Peacock will do very well in China too because I expect it will include their Chineese partners. In Europe, a combination including over the top streaming local TV like Star does will allow Disney to grow and compete. They may stay smaller that Star but their profits will be large. In Central and South America. the Fox assests will allow Disney to reach the top spot. That only leaves Africa for the fight to see who is numbet 1 but if you carefully look at the full streaming market it is hard to make an argument that Disney will not be the number 1 provider

Percentages are actually easier to understand and used for comparisons. Solid #s are too complex for the simple minds and whatever it takes to please Wall Street so analysts can recommend a BUY in the company stock and the media networks to talk up Disney. Numbers can be fudged but that would be not good if Disney played that game.

Almost every hotel company would die for 80% occupancy. Now remember, in the first quarter includes the Coronado tower that is new and the Riviera. All those new rooms and still 90% occupancy expected. It should be around another 845 rooms, which even with an average of 2 people per room should add 1,521 people a day or 555,165 a year to attendance. I know that is only slighyly above a 1% increase in their attendance but it is a very conservative number. Then consider the new rooms at Bonnett Creek and Flamingo Crossing and all the new hotel rooms else in the themepark area.

@seascape Believe me, I’m no doom-and-gloomer. However, I am a businessperson in the entertainment industry, and very realistic.

Looking at P&R, Disney reporter moderately successful numbers despite much-ballyhooed ticket and food increases and lackluster response to SWGE. If we ignore the accounting/PR spin and look back a few months, at the time, Disney reacted to those—successes?—by cutting entertainment, cutting frontline CM hours, and cutting mid-level management. Why? So they could show a better profit.

 

[Sirwalterraleigh]

I must have misunderstood a post of yours on another thread. I thought you were just there riding the Skyliner. My mistake.

Without booking a Disney room/DVC...no tickets...I did get a sandwich from the boardwalk greasestand - so guilty there....

I was in town for work and had a couple hour gap. The property is still amazing/beautiful...it’s just that the cutthroats that run it currently suck and the people don’t know how to control/help themselves.

I still don’t mind being there

 

[Sirwalterraleigh]

Nevertheless, attendance at WDW has definitely gone up over the years, as guests have simply cut back on merch spending to make up the ticket difference.

It’s easier to see the impact in California because the resort depends on a network of local hotels, all of whom reported low occupancy over the summer.

Attendance has gone up everywhere over the last 30-40 or so years...

Look at resort towns or cruise ships. more people travel to these types of destinations.

I said it on another thread: Disney’s “boat” has been risen by higher seas...whether they have done anything right or not.

And credit where due: that was the strategic genius of the Eisner regime. Build out and let the money backfill. That’s exactly what has happened.

 

[Disneyhead'71]

I can't believe the doom and gloom here. Yes, China had problems and hurt income but lets be real, Parks, Resorts and Consumer Products profits were up 17%. If China is going to be a problem for Disney. Universal will have the same problem, especially when even with great results at Universal Japan. they only had a 0.9% increase in profits.

Now getting to streaming. Hulu is the hidden gem. The bundle is going to be massive. Plus, in early 2020 the plans for Hulu's international expansion will be announced. Think of how many subscribers Disney Plus, Hulu, ESPN Plus and Hotstar will have. A bundle if the 4 in India will blow everyone else out of the water in a country with just about the same population as China. They will also beat Netflix in China. However. Peacock will do very well in China too because I expect it will include their Chineese partners. In Europe, a combination including over the top streaming local TV like Star does will allow Disney to grow and compete. They may stay smaller that Star but their profits will be large. In Central and South America. the Fox assests will allow Disney to reach the top spot. That only leaves Africa for the fight to see who is numbet 1 but if you carefully look at the full streaming market it is hard to make an argument that Disney will not be the number 1 provider

Universal's profits were offset by CapEx. They have 2 brand new from the ground up resorts under construction.

 

[peter11435]

Universal's profits were offset by CapEx. They have 2 brand new from the ground up resorts under construction.

Disney has three cruise ships, an island, one resort expansion, one new resort experience, 2 new resorts, an entire park overhaul, 4 major attractions at WDW, a new land at DCA, a major new attraction at Disneyland and other international expansion under construction.

 

[bartholomr4]

Universal's profits were offset by CapEx. They have 2 brand new from the ground up resorts under construction.

Capital investments at Universal parks was up from $308 last year to $505 million this year ($257 million of this for Universal Beijing). CapEx is spread over time and depreciate. CapEx really isn't included in the change of attendance or the change in revenue or profit.

If you look at the amount of CapEx in the parks at Universal ($505 million) and CapEx in the Parks at Disney (4.1 billion), the increase in CapEx spending at Disney was almost greater than the total spending at Universal.

Comcast is spending 9 times as much in CapEx on its networks than it is on its parks.

 

[Disneyhead'71]

Disney has three cruise ships, an island, one resort expansion, one new resort experience, 2 new resorts, an entire park overhaul, 4 major attractions at WDW, a new land at DCA, a major new attraction at Disneyland and other international expansion under construction.

Yep, but compare that to 40+ new attractions, 4 hotels, 2 dining/entertainment districts, and ALL the infrastructure associated with brand new resorts. Also throw in 2 Super Nintendo Worlds in Osaka and Hollywood, Secret Life Of Pets in Hollywood, and the Velicoaster in Orlando.

 

[VaderTron]

Without booking a Disney room/DVC...no tickets...I did get a sandwich from the boardwalk greasestand - so guilty there....

I was in town for work and had a couple hour gap. The property is still amazing/beautiful...it’s just that the cutthroats that run it currently suck and the people don’t know how to control/help themselves.

I still don’t mind being there

Understood. I did the same thing not long ago when I was in town for a Dr. appointment. Spent $2 on a popcorn bucket refill. (Don't get me started again! Still enraged with that fiasco!)

 

[VaderTron]

Disney has three cruise ships, an island, one resort expansion, one new resort experience, 2 new resorts, an entire park overhaul, 4 major attractions at WDW, a new land at DCA, a major new attraction at Disneyland and other international expansion under construction.

Disney also has made major price increases in every aspect of their parks experience and introduced several brand new up-charge events over the past year. They have double sold 2 of their parks on more dates than ever before and charged more per ticket during the most attended times of the year.

At the same time they fired employees from entertainers to front line CM's. Those that did stay on frequently had their hours cut.

They are a business. They know how to hide losses.

 

[peter11435]

Yep, but compare that to 40+ new attractions, 4 hotels, 2 dining/entertainment districts, and ALL the infrastructure associated with brand new resorts. Also throw in 2 Super Nintendo Worlds in Osaka and Hollywood, Secret Life Of Pets in Hollywood, and the Velicoaster in Orlando.

Exactly. They both have a considerable amount of investment occurring.

 

[VaderTron]

Their models are accurate. The trend usually holds. It could just as easily increase above 90% as it could drop below 90%.

1. No, it couldn't easily go over 90%. Those in the industry understand that hotel occupancy is red-lining at 90%. You can't go much higher than that at all. It's much easier for it to miss and settle down a few percentage points than it would be to exceed 90%.

2. Jacksonville Jaguars couldn't sell out their stadium for nearly a decade. As many know that meant the game was subject to blackout from local TV broadcasting. Someone decided to put tarps over huge sections of the stadium and suddenly they were "selling out" the stadium and the games could once again be broadcast. Similarly, Disney knows how to move numbers around like anyone else. Likely they are not counting all of the unsold DVC "rooms" at Riviera as part of their occupancy totals. So, at the moment they might just be counting purchased Riviera DVC holdings as "occupied" rooms. If so, that would make the number "100%" occupied of the rooms available. Additionally, they do not count areas they are refurbishing towards their totals. Room demand down? Time for a "refresh" of a wing of the hotel. Now it's not counted in the total.

3. I have seen some of the largest discounts on DVC rental web sites in the past few months. Some flash sales have offered rooms such as:

Saratoga Studio: $120 (multiple dates)
Saratoga Studio Preferred: $150 (multiple dates)
OKW Studio: $126, $139
OKW 1B Villa: $216 (multiple dates)
AK Studio: $99!!!
AK Savanna: $160
AK 1B Villa: $242 (multiple dates)

Those prices were offered by just one re-seller. Many more were offered at varied discounts by many other companies. Increasing hotel occupancy numbers by selling some at less than half the rack rate price (sometimes even 75% off) does not mean that they are in more demand than ever before. It means people like deals.


Another key point is that hotel occupancy does not indicate interest in the parks. Many, people stay in a Disney hotel without ever visiting the parks. Notice that they keyed in on hotel occupancy rates rather than daily park ticket sales numbers. Usually it's good to look at what big corporations don't focus on in their reports to find out what isn't doing so well, because if it was they would be talking about it.